© Reuters. FILE PHOTO: Signage is seen outside the entrance of the London Stock Exchange in London, Britain. Aug 23, 2018. REUTERS/Peter Nicholls
By Sruthi Shankar and Bansari Mayur Kamdar
(Reuters) -UK’s midcap stocks index slipped on Wednesday after finance minister Rishi Sunak unveiled measures as largely anticipated to ease the worst cost-of-living squeeze in decades.
The export-oriented FTSE 100 edged up 0.1%, boosted by commodity stocks, while the domestically focussed midcap index dropped 0.4%.
Announcing a half-yearly budget update in parliament, Sunak said he was increasing the threshold at which workers start to pay national insurance contributions by 3,000 pounds ($3,958.50) this year, and cut fuel duty by 5 pence per litre.
The market reaction was subdued as investors focussed on the Ukraine conflict, surging inflation and hawkish comments from U.S. Federal Reserve officials.
“Today’s Spring Statement from the Chancellor of the Exchequer did go some way to mitigating some of this. However, the measures will do little to ameliorate the bulk of what’s coming our way,” said Michael Hewson, chief market analyst at CMC Markets.
Data earlier showed British inflation shot up faster than expected in February to hit a new 30-year high of 6.2%, while the median forecast in a Reuters poll of economists had pointed to a reading of 5.9%.
The Bank of England last week hiked interest rates for a third time in a row to combat surging inflation, but raised doubts about further hikes as the Ukraine crisis increases the risk of an economic downturn.
Britain’s main stock indexes opened higher, but were quick to give up gains as oil prices jumped over 4%, supported by disruption to Russian and Kazakh crude exports via the CPC pipeline. [O/R]
Homebuilders, travel and retail stocks were among the biggest decliners.
“General retailers are obviously feeling the pinch due to the cost of living crisis that they’re going to be at the sharp end of … really, with the exception of mining and oil and gas sector, everything is falling,” said David Madden, market analyst at Equiti Capital.
Reckitt Benckiser Group fell 3.7% after Jefferies downgraded the consumer good giant’s stock to “underperform.”
British midcap stocks slip as budget update fails to soothe nerves
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